tag:blogger.com,1999:blog-3782644139927778760.post1204489318559716754..comments2007-06-25T03:17:29.147-04:00Yves Smithhttp://www.blogger.com/profile/03506020285476330865noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-3782644139927778760.post-45905797677669928862007-06-25T03:03:00.000-04:002007-06-25T03:03:00.000-04:002007-06-25T03:03:00.000-04:00Good piece. One additional thing to underline about the comparison with LTCM and many hedge funds. It's not just rising correlations that killed LTCM - it was lack of liquidity in the instruments and hedges. A hedge that you cannot utilise when the margin calls come - because there is no market all of a sudden - defies any mathematical model.<BR/><BR/>This is what an enormous part of the LTCM problem was: no-one would (or could) buy or sell, particularly the Russian paper.<BR/><BR/>To date, BearStearns and its counterparties kept the market just liquid enough - barely - to prevent liquidation and seize-up, but this was hardly a full stress test.Greghttp://www.blogger.com/profile/04001223599837243168noreply@blogger.comtag:blogger.com,1999:blog-3782644139927778760.post-81676013505446232982007-06-24T14:23:00.000-04:002007-06-24T14:23:00.000-04:002007-06-24T14:23:00.000-04:00Good post. Thanks.<BR/><BR/>Gretchen is one of my favorite reporters but she, like all almost all Americans, including CR and Tanta (whom I like), suffers from putting all the emphasis on systems, models, etc., and not on the people who control the system and models.<BR/><BR/>Good systems produce good leaders, relatively speaking. Bad systems bring bad people to the positions of power. Similarly, economic models are only as good as the people, especially, the managers of the businesses that produce models, behind them. Democracy is a good political system even when it re-elects GW Bush? Free Market is a good system to distribute fruits of labor commensurate with effort and risk even when tens of members of criminal gangs of bankers and financiers got higher compensation, each, than the TOTAL LIFE TIME compensation of all the 3,000+ soldiers who have dies in Iraq, without any risk to life or their own capital?<BR/><BR/>In America of the past dozen years or so the economic system, the political system, and the economic models of risk, are all being controlled by what I have termed the Criminal Gangs of Bankers and Financiers of New York City. Goldman Sachs is more evil than any of the Mafia gangs of the past. The difference is that Goldman Sachs owns shares in the American govt!<BR/><BR/>It is NOT the system, Stupid! And it ain’t the Models, Stupid!! The systems and the models are in the hands of an organized gang of criminals who suck the financial blood out of the men who work and risk their lives. These men are evil in case an American has a hard time in identifying what evildoers look like.<BR/><BR/>All organized human endeavors are subject to be controlled by a group of evil men. In America, we have reached that fateful point.<BR/><BR/>JasJas Jainhttp://www.financialsense.com/fsu/editorials/jain/archive.htmlnoreply@blogger.comtag:blogger.com,1999:blog-3782644139927778760.post-42738198591105552182007-06-24T10:05:00.000-04:002007-06-24T10:05:00.000-04:002007-06-24T10:05:00.000-04:00http://www.bloomberg.com/news/marketsmag/pensions.pdf<BR/>Banks Sell 'Toxic Waste' CDOs to Calpers, Texas Teachers Fund<BR/><BR/>http://www.bloomberg.com/apps/news?pid=20601170&sid=ajs7BqG4_X8I<BR/>CDO Boom Masks Subprime Losses, Abetted by S&P, Moody's, Fitch<BR/><BR/>http://www.bloomberg.com/apps/news?pid=20601087&sid=agMH1wIg9Vtg<BR/>Chanos, Betting Against Buffett, Sells Moody's ShortAnonymousnoreply@blogger.com